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A
fter a long career in loss
prevention, including twenty-six
years at Best Buy, Paul Stone,
CFE, LPC, is now experiencing
unparalleled results. Tempted out of
semiretirement six months ago, Stone
joined Goodwill Industries of
Southeastern
Wisconsin as its
vice president of
security. "We have
zero shrink," he
said, a smile in his
voice. "It is, by far,
the lowest I've ever
had in my career."
He's joking.
When you're
accepting and selling donated items,
it's impossible to know, really, how
much diversion is going on. Traditional
inventory tracking doesn't exist. Valid
shrink figures can't be calculated. But
while a standard performance metric
may not apply, the importance of
successful loss prevention is the same for
a nonprofit as it is for any retailer—and
perhaps more so. When LP leaders work
for a cause-driven organization, revenue
protection truly is "mission critical."
"Whether you're at a big box store
or a place like Goodwill, all of us in
LP are trying to do the right things
for our companies," explained Larry
Hartman, director of risk management,
loss prevention, and safety at Goodwill
Industries of Central Florida. "Usually
that protection of assets is helping
our companies' sales. In our case, it's
providing the revenue we need to carry
out our missions."
Goodwill is a big operation. It has
161 member organizations, comprises
3,250 North American stores, and has
approximately 130,000 employees.
It's the second-largest nonprofit in the
US, serves 36 million people annually,
and has helped put people to work
since 1902. It is both ubiquitous
and well regarded; yet, it can be
oddly misunderstood.
People typically know that there
is charity going on behind the
scenes—that good works are the
driving force lurking behind its
model—but the face of Goodwill is its
retail locations. Its thrift store business
is at the heart of its public image. So,
for many people, there may not be
much consideration of Goodwill
beyond it being a good place to shop
and a convenient way to get rid of
clothes that no longer fit for a
tax write-off.
Until he got
involved with
Goodwill, Mike
Keenan, CPP, CFI,
LPC, said he had a
very rudimentary
picture of it.
"But when you
learn about all
that they do
and how they help people in need, it
really blows you away," said Keenan,
who has led LP at Macy's, Ross, and
Gap and is now president of Mike
Keenan and Associates, a retail loss
prevention consulting company.
Goodwill organizations routinely
provide job training opportunities and
job placement free to disadvantaged
individuals. "I found it really
fascinating, and I have been moved
by the people whose lives I've seen
changed," he said.
He was so moved, in fact, that his
volunteer commitment to his local
chapter has expanded significantly,
and since April 2018 he has served
as the chairman of the board of
Goodwill Industries of the Greater
East Bay, which serves Alameda,
Contra Costa, and Solano counties in
Northern California.
Before his involvement, however,
"I mostly thought of it as a donation
drop-off place," said Keenan. "I didn't
know much about the mission or what
it did."
Regardless of geography or size
of Goodwill territory, LP leaders
we interviewed cited awareness and
perception as a primary determinant of
LP's success. Theft depends significantly
on the extent to which employees
and members of the public equate
Goodwill's mission with its thrift-store
items. If that connection doesn't exist,
then the items on store shelves or at
donation drop-offs are someone's
unwanted items or junk—and, to many,
freebies for the taking.
"Philosophically, when you've got
donated product coming in, people see
it as free. And because of that 'free'
notion, they are certainly tempted to
take it," explained Keenan. "The 'free'
attitude permeates everything about
inventory loss. When people think it's
free, they don't treat it as carefully. You
can get in nice glassware, and someone
will just throw it in a box."
The "free" attitude toward donated
items underlies risk for a nonprofit
retailer. And it is partly why some
struggle financially even though
inventory truly is, well, free. "Every
Goodwill on the planet should be
profitable, but some struggle
because they lack efficiency and
execution—and because of theft," said
Keenan, who is taking aim at exactly
those items in an effort to solidify the
unsure financial footing of Goodwill
of the Greater East Bay.
Trying to alter the "free" mindset
is at the core of Goodwill LP
programs, but implementing culture
change is in addition to—it does
not replace—typical retail risks.
Resellers pose a problem. Stores get
hit by organized retail crime (ORC)
gangs. Price switching—yes, price
switching—is a common scheme.
Goodwill stores also face other
unique risks, such as the fact that
store associates are often individuals
who would never pass a background
check at a major retail chain.
In short, Goodwill offers LP
leaders a rewarding place to apply
their talents, but it's not easy work.
"Thrift stores are a billion dollar
business," said
Carlos Garcia,
director of loss
prevention
for Goodwill
Industries of
South Texas.
"But it's also a
million-dollar
LP nightmare."
Paul Stone
Mike Keenan
Carlos Garcia
16
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